Since inception, QuickSwap has strived to establish itself as one of the biggest community supporters within the Polygon ecosystem. The dragon DEX is the home for LPs (liquidity providers), where they earn a portion of trading fees and can also receive high farming rewards in return for depositing their liquidity.
As the current fee structure for LPs has been in place for several years, it’s time to explore a proposed change aimed at updating to a new swap fee structure which strives to keep QuickSwap’s similar/aligned with other V3/V4 DEXs while also benefitting QUICK token holders.
This governance proposal has been introduced for the dragon community to decide if the fee structure should be updated, where 85% of the fees generated from swaps will go to LPs versus the existing 90% (a breakdown of the 15% fee distribution will be outlined below).
TL;DR:
- To begin, the governance discussion on the official QuickSwap Reddit will run until Tuesday, February 25 at 12:00 PM UTC
- Once the Reddit discussions finish, a formal Snapshot vote will run until Saturday, March 1 at 12:00 PM UTC
- Once you’ve read this entire blog post, make sure to visit the official QuickSwap Reddit discussion forum and Discord channel to share your perspective with your fellow community members
Current vs. Proposed (New) Fee Structure
Currently, LPs on QuickSwap receive 90% of all swap fees generated on the DEX - this is uniform across all chains utilising Algebra V3 and V4. The remaining 10% goes to QuickSwap, and is broken down below.
Current fee distribution (10% going to QuickSwap):
- 6.8% to burn
- 1.7% to the Foundation
- 1.5% to Algebra Labs
This proposal aims to increase QuickSwap’s overall fee share from 10% to 15%, meaning 85% of all swap fees would go to LPs - this is outlined below in more detail (also note that there is a substantial increase in fee distribution to burning QUICK).
New proposed fee distribution (15% going to QuickSwap):
- 10% to burn
- 3.23% to the Foundation
- 1.77% to Algebra Labs
As mentioned earlier, this updated fee structure will bring QuickSwap more in line with those of other V3 and V4 DEXs on the market, while also greatly benefiting QUICK holders - a big net positive for the token (more on that in the next section below).
Benefits To QUICK Token Holders
To illustrate how this updated fee structure could potentially benefit QUICK holders, let’s outline the numbers based on how much QUICK would have been burned (and how much would be burned in the future) in two scenarios.
This updated fee structure proposes to increase the QUICK burn rate from 6.8% to 10% - the figures below showcase the effects of the 6.8% burn rate (example 1) and 10% burn rate (example 2).
Example 1 (6.8% Burn Rate):
- Total QUICK burned (since October 1, 2024): 12,707,970.69 QUICK
- Burn per day (since October 1, 2024): 95,548.65 QUICK/day
- Projected yearly burn: 34,875,257.92 QUICK
Example 2 (10% Burn Rate):
- Total QUICK burned since October 1, 2024: 18,688,192.20 QUICK
- Burn per day (since October 1, 2024): 140,512.72 QUICK/day
- Projected yearly burn: 51,287,144.00 QUICK
What’s the overall impact of increasing the burn rate per this proposal? A 47.06% increase in both the total burn and projected yearly burn.
Therefore, as of February 11, 2025, if the burn rate had been 10% instead of 6.8%, an additional ~6 million QUICK tokens would have been burned over this period. If this were to occur over the course of an entire year, this could lead to an annual burn of over 51 million QUICK, significantly accelerating deflation and increasing token scarcity.
*Note that the QUICK burn, otherwise known as the ‘Trial of Fire’ was extended per a recent governance proposal - this is where 100% of protocol revenue that goes to the Dragon’s Lair is being utilised to buy back and burn QUICK. A new vote will be introduced at the beginning of April 2025 to decide if the burn should continue or if revenue should flow back to QUICK stakers.
Join the Discussion
As always, QuickSwap community members are encouraged to participate in and contribute to QuickSwap governance discussions and proposals across all of QuickSwap’s online forums, especially on Reddit. As a Dragon, you are a valued community member and your opinion matters – but you have to participate in community voting procedures to make it count.
Critical decisions guiding QuickSwap’s strategic development will always be determined by way of decentralised governance. QuickSwap’s future is in your hands, so make your voice heard!